P3-66A (Learning Objective 1: Explain how accrual accounting differs from cash-basis accounting) Masters Consulting had the following selected transactions in July: Jul 1 4 5 8 11 19 24 26 29 31 31 Prepaid insurance for July through November, $2,000. Purchased office furniture for cash, $1,000. Performed services and received cash, $800. Paid advertising expense, $700. Performed service on account, $3,400. Purchased computer on account, $2,000. Collected for July 11 service. Paid account payable from July 19. Paid salary expense, $1,500. Adjusted for July insurance expense (see July 1). Earned revenue of $1,000 that was collected in advance back in June. Requirements 1. Show how each transaction would be handled using the cash basis and the accrual basis. 2. Compute July income (loss) before tax under each accounting method. 3. Indicate which measure of net income or net loss is preferable. Use the transactions on July 11

P3-66A (Learning Objective 1: Explain how accrual accounting differs from cash-basis accounting) Masters Consulting had the following selected transactions in July: Jul 1 4 5 8 11 19 24 26 29 31 31 Prepaid insurance for July through November, $2,000. Purchased office furniture for cash, $1,000. Performed services and received cash, $800. Paid advertising expense, $700. Performed service on account, $3,400. Purchased computer on account, $2,000. Collected for July 11 service. Paid account payable from July 19. Paid salary expense, $1,500. Adjusted for July insurance expense (see July 1). Earned revenue of $1,000 that was collected in advance back in June. Requirements 1. Show how each transaction would be handled using the cash basis and the accrual basis. 2. Compute July income (loss) before tax under each accounting method. 3. Indicate which measure of net income or net loss is preferable. Use the transactions on July 11

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter5: Accounting Systems

Section: Chapter Questions

Problem 1PA: Sage Learning Centers was established on July 20 to provide educational services. The services...

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(Learning Objectives 4, 5: Account for accounts receivable and uncollectibleaccounts) Perform the following accounting for the receivables of Andrews and Johnson, a lawfirm, at December 31, 2018.Requirements1. Set up T-accounts and start with the beginning balances for these T-accounts:■ Accounts Receivable, $100,000■ Allowance for Uncollectible Accounts, $14,000Post the following 2018 transactions to the T-accounts:a. Service revenue of $697,000, all on accountb. Collections on account, $714,000c. Write-offs of uncollectible accounts, $8,000d. Uncollectible-account expense (allowance method), $11,0002. What are the ending balances of Accounts Receivable and Allowance for UncollectibleAccounts?3. Show how Andrews and Johnson will report accounts receivable on its balance sheet atDecember 31, 2018.
P3-58A. (Learning Objective 1: Explain how accrual accounting differs from cash-basisaccounting) Berkley Consulting had the following selected transactions in July:July 1 Prepaid insurance for July through September, $3,900.4 Purchased office furniture for cash, $3,000.5 Performed services and received cash, $1,800.8 Paid advertising expense, $300.11 Performed service on account, $3,100.19 Purchased computer on account, $1,600.24 Collected for July 11 service.26 Paid account payable from July 19.29 Paid salary expense, $1,100.31 Adjusted for July insurance expense (see July 1).31 Earned revenue of $400 that was collected in advance back31 Recorded July depreciation expense on all fixed assets, $408.in June.Requirements1. Show how each transaction would be handled (in terms of recognizing revenues andexpenses) using the cash basis and the accrual basis.2. Calculate July income (loss) before tax under each accounting method.3. Indicate which measure of net income or net loss is…
(Learning Objectives 4, 5: Account for accounts receivable and uncollectible receivables) On November 30, Palmer Party Planners had a $41,000 balance in Accounts Receivableand a $3,584 credit balance in Allowance for Uncollectible Accounts. During December, Palmermade credit sales of $200,000. December collections on account were $168,000, and write-offsof uncollectible receivables totaled $2,910. Uncollectible-account expense is estimated as 1% ofcredit sales. No sales returns are expected. Ignore cost of goods sold.Requirements1. Journalize sales, collections, write-offs of uncollectibles, and uncollectible-accountexpense by the allowance method during December. Explanations are not required.2. Show the ending balances in Accounts Receivable, Allowance for Uncollectible Accounts,and Net Accounts Receivable at December 31. How much does Palmer expect to collect?3. Show how Palmer Party Planners will report Accounts Receivable and net sales on itsDecember 31 balance sheet and income…
P3-66B. (Learning Objective 1: Explain how accrual accounting differs from cash-basisaccounting) Westchester Consulting had the following selected transactions in May:May 1 Prepaid insurance for May through July, $2,250.4 Purchased office furniture for cash, $4,000.5 Performed services and received cash, $1,000.8 Paid advertising expense, $300.11 Performed service on account, $3,500.19 Purchased computer on account, $2,000.24 Collected for May 11 service.26 Paid account payable from May 19.29 Paid salary expense, $1,000.31 Adjusted for May insurance expense (see May 1).31 Earned revenue of $1,000 that was collected in advance back31 Recorded May depreciation expense on all fixed assets, $108.in April.Requirements1. Show how each transaction would be handled (in terms of recognizing revenues andexpenses) using the cash basis and the accrual basis.2. Calculate May income (loss) before tax under each accounting method.3. Indicate which measure of net income or net loss is preferable. Use…
P5-63A (Learning Objectives 2, 3, 4: Apply GAAP for revenue, receivables, collections, and uncollectibles using the percent-of-sales method) This problem takes you through the accounting for sales, receivables, and uncollectibles for Quick Mail Corp., the overnight shipper. By selling on credit, the company cannot expect to collect 100% of its accounts receivable. At July 31, 2012, and 2013, respectively, Quick Mail Corp. reported the following on its balance sheet (in millions of dollars): July 31, 2013 2012 Accounts receivable. Less: Allowance for uncollectible accounts. . $3,690 (119) $3,430 (160) $3,270 Accounts receivable, net $3,571 During the year ended July 31, 2013, Quick Mail Corp. earned service revenue and collected cash from customers. Assume uncollectible-account expense for the year was 4% of service revenue and that Quick Mail wrote off uncollectible receivables. At year-end, Quick Mail ended with the foregoing July 31, 2013, balances. • Requirements 1. Prepare…
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Instruction: From the following partial worksheet of Atty. Villanueva for six-month period ended December 31, 2019, prepare the financial statement in good form. Income Statement Balance Sheet Trial Balance Debit 40,000 50,000 30,000 10,000 20,000 15,000 Credit Debit Credit Debit Credit Cash on Hand Cash in Bank 40,000 50,000 30,000 10,000 20,000 15,000 Accounts Receivable Note Receivable Prepaid Insurance Office Furniture Accounts Payable Notes Payable M. Capital M. Drawing Service Income Salaries Expense Supplies Expense Taxes and Licenses Rent Expense Interest Expense 20,000 10,000 77,000 20,000 10,000 77,000 5,000 5,000 150,000 150,000 36,000 8,000 5,000 24,000 2,000 3,000 36,000 8,000 5,000 24,000 2,000 3,000 Bad Debts Allowance for Bad Debts 3,000 3,000 Depreciation Expense Accumulated Depreciation - Furniture Insurance Expense Unused Supplies Interest Income 1,500 1,500 1,500 1,500 10,000 3,000 10,000 3,000 1,000 262,500 262,500 89,500 151,000 173,000 111,500 Net Income 61,500…
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